Cameron G20 missteps point to wider UK problems

LONDON (Reuters) - Accused of irritating France and Russia, frustrating the United States and falling into a testy exchange with Argentina over the Falklands, David Cameron’s G20 summit didn’t go well.

As he returns from Mexico, the British prime minister is probably hoping to put the series of apparent diplomatic missteps behind him, but it may not be that easy.

Beyond the personal criticism of Cameron, a belief seems to be growing in several foreign capitals that Britain itself is losing its influence partly due to hostility in his Conservative Party to the European Union and the euro project.

Diplomatic insiders and veterans say that Cameron at the very least ruffled feathers at this week’s summit in Los Cabos and provided an unnecessary distraction.

“You have the G20 meeting: the euro zone is in trouble, Iran and Syria represent urgent challenges. And where is Cameron? He’s sparring with the Argentinians over the Falklands and upsetting the French,” said Charles Kupchan, lead U.S. National Security Council official for Europe under President Bill Clinton.

“That’s really not helpful,” added Kupchan, a professor at Georgetown University and senior fellow at the Council on Foreign Relations.

At a late-night meeting with business leaders, Cameron said Britain was ready to “roll out the red carpet” to French firms wanting to leave the country if newly elected socialist President François Hollande imposes planned tax rises.

Hollande himself refused to be drawn, saying Europe should show unity and that France was always happy to put its fiscal policies up for comparison, but several members of his entourage were more critical. European affairs minister Bernard Cazeneuve described the comments as misplaced “British humour”.

Exactly what happened with Argentine President Cristina Fernandez remains unclear. According to her spokesman, Cameron approached Fernandez to thank her for support on European banking reform. She then immediately raised the disputed sovereignty of the British-controlled Falkland Islands, which the countries fought a war over 30 years ago.

Fernandez apparently offered Cameron an envelope labelled “Malvinas”, the Argentine name for the South Atlantic islands, containing several dozen U.N. resolutions calling for dialogue on the dispute. Argentina says Cameron refused to accept the envelope or further discussion and walked away.

A British source confirmed some of the details, saying Fernandez did have a document but it was not clear if she was trying to hand it to Cameron. The Argentine delegation had a small video camera with them, the British source said, and might have been trying to record the exchange.

Even harder to explain were Cameron’s comments that appeared to suggest Russian President Vladimir Putin had shifted his position on Syria and might abandon President Bashar al-Assad, who is trying to put down a rebellion by force.

That appeared almost immediately to be countered by both Putin and U.S. President Barack Obama, while Russian Foreign Minister Sergei Lavrov said Cameron’s comments did not “correspond with reality”.

Unsurprisingly, Downing Street played down talk of “gaffes” and suggested Cameron’s comments on Western demands that Assad step down in a transition of power had been misinterpreted.

“Going back to what the prime minister actually said: ”Of course there are known differences over the sequencing and the exact shape of how the transition takes place. It is welcome that President Putin has been explicit that he is not locked into Assad remaining in charge in Syria“,” his spokeswoman said. “That’s what the prime minister said and I have no reason to believe that that’s not ... (Putin’s position).”

MISREADING THE SITUATION?

Still, by talking openly about the Russian position before the Russians themselves, Cameron was breaching protocol and always likely to upset both Moscow and Washington.

Like Foreign Secretary William Hague, who was widely ridiculed for wrongly announcing last year that Libya’s Muammar Gaddafi had fled on a plane to Venezuela, Cameron was also leaving himself unnecessarily open to being proved wrong.

Other leaders at a meeting with Putin - Hollande, German Chancellor Angela Merkel and Turkish Prime Minister Tayyip Erdogan - held back on such comments and largely left Obama and Putin to explain themselves.

“With Cameron, there can be a feeling that he’s playing to a statesmanlike role that really isn’t present for him,” said Tyson Barker, head of transatlantic relations at the Bertelsmann Foundation in Washington.

“The discussions with Putin on Syria ... would really have primarily been a bilateral discussion between Putin and Obama. Any statement on a change in the Russian position should have come first from Putin, with any hint of it in advance coming from Obama or the State Department. Cameron may not have understood that.”

Part of the problem, some people suspect, is that the Cameron government has yet to find its place in a changing world. While the Conservative prime minister is credited with helping to drive the successful intervention in Libya which led to Gaddafi’s overthrow, on other fronts his government is seen as still seen struggling for influence.

Compared with his Labour predecessors Gordon Brown and Tony Blair, he has been dealt a relatively poor hand. While unpopular at home, Brown had the right background as a long-serving finance minister to help bring the G20 together during the financial crisis of 2008-9, and was praised internationally for this.

For better or worse, the September 11, 2001 attacks on the United States and following wars allowed Blair to move much closer to Washington, which greatly appreciated British military and diplomatic support in the Iraq and Afghan conflicts.

Britain's Prime Minister David Cameron (L) and Mexico's President Felipe Calderon toast during a dinner at Chapultepec Castle in Mexico City June 20, 2012. REUTERS/Bernardo Montoya

But these are now winding down, the British economy is in recession and Washington is explicitly “pivoting” its strategic focus towards Asia and a rising China, so Cameron has much less to offer.

With a presidential election a few months away, when Britain is mentioned in U.S. politics it is generally for its domestic lessons rather than any talk of a “special relationship”. Some Republicans continue to praise Cameron for his commitment to reining in public spending, but Democrats present the British economy as proof that cutting spending too fast and too hard is folly.

EUROPEAN CONUNDRUM

Perhaps most crucially of all, the combination of the euro zone crisis and the often openly Eurosceptic approach of Cameron’s Conservatives is reducing Britain’s clout in its immediate neighbourhood.

Some people argue that Cameron’s government is in an almost impossible position. As euro member states struggle to work out how they will tackle their crisis, they inevitably have little interest in hearing from non-euro Britain.

But if euro members use EU systems to pull together in ever greater union and financial regulation, they will probably want Britain to join them to avoid London’s financial centre gaining a competitive advantage through lighter oversight.

No British government would find that appealing but the combative approach of the current government may be making things worse.

In October, Cameron effectively walked out of a euro zone summit in a move that critics say gained him little but cost him influence including with Merkel, the European leader who is one of the closest to him politically. Former French President Nicolas Sarkozy even told Cameron to “shut up” on the euro.

Such incidents have irked an Obama administration desperate to keep Europe’s crisis under control and prevent it further damaging the U.S. economy before the election.

“The idea that the UK can preach on fiscal union, a banking union, a growth agenda and a series of steps in Europe that it would never undertake itself plays badly,” says the Bertelsmann Institute’s Barker. “The bottom line is that Britain just ends up losing influence.”

Such concerns may also be circulating within Whitehall.

“There’s no doubt that one of the reasons the U.S. values the UK relationship is its ability to influence Europe,” said Alastair Newton, a former senior cabinet and foreign office official and now chief political adviser to Japanese bank Nomura. “I have little doubt that senior Foreign Office and other officials, including William Hague, will have made that point to Cameron. But the bottom line is that you have a Eurosceptic Conservative party, a Eurosceptic press and - let’s face it - a Eurosceptic population.”

But if Britain - and Cameron in particular - cannot find their place soon, some believe it may be too late. When it comes to spats such as that over the Falkland Islands, London might find itself with remarkably few friends.

“What’s really striking to me is the extent to which Cameron seems to be taking the UK out of the game,” says former Clinton official Kupchan. “London’s relevance on the world stage seems to have declined since he became prime minister. Part of that might be inevitable given the circumstances ... but Cameron’s statecraft is also leading to self-isolation.”